Newsmax Finance Insider and economist Edward Yardeni has hiked his earnings forecast for 2017 as he expects Donald Trump to foster a more business friendly environment than Barack Obama.

The combination of a GOP White House and Congress is being widely interpreted by investors to mean less regulation, lower taxes and supportive of growth.

"Love it or hate it, it's going to be quite dramatic and a government of deal makers as opposed to a government of shall we say 'community organizers' is going to be a radically different kind of regime. And, I think the market likes it," Yardeni told CNBC.

Yardeni said stocks aren’t overvalued, calling it one of the biggest misconceptions which could boost the market even higher.

"I now think that earnings instead of being up eight percent, it could be up closer to 20 percent. That's the kind of impact the substantial tax cuts could have," said Yardeni, president of Yardeni Research.

"It may not happen until the summer or fall. The question is: Will it be retroactive? I think it will be retroactive," he added.

The historical gains could just be beginning.

"As soon as Trump won, the markets started to rethink whether he was bullish or bearish, and very quickly concluded he was bullish because of his economic program. Not only that, he came in with a majority in both houses of Congress which increases the chances they'll get his tax cuts passed," said Yardeni.

"I think it's a good bet," he said. "I think we shouldn't underestimate how radical this change is going to be," he said.

To make the most of potential market gains in 2017, Yardeni recommends stocks in the consumer discretionary and financial services areas.

"Financials have had a great move, but they were extremely disliked — hated even. And, they were big laggards," he said.

"I think there is still more room in the financials. I could see the ten-year bond yield getting to three percent next year," said Yardeni.

"A three percent bond yield certainly would indicate a stronger economy and that would mean the yield curve would continue to steepen. And a steepening yield curve is usually a sign of better growth and it's great for the financials," he added.

Dr. Ed Yardeni is the President of Yardeni Research, Inc., a provider of independent global investment strategy research.